3 min read January 2024 — In an interview with Invest:, Ting Qiao, CEO and co-founder of developer Wan Bridge, shared insights into the company’s pioneering build-to-rent community model. Overcoming initial skepticism, Wan Bridge has excelled with a top-tier build-to-rent community, highlighting the crucial role of technology in streamlining processes, Qiao said, while encouraging investors to seize the opportune moment within the build-to-rent sector.
What factors have contributed to the success of Wan Bridge’s build-to-rent community model?
When we began, the idea of constructing homes specifically for rent, commonly known as “build to rent” was quite novel. Eight years ago, many were skeptical about its feasibility, and questions arose about ownership, resident demographics, financing, and potential impacts on neighboring property values. Despite challenges, we focused on providing flexibility and affordability to residents. It was initially difficult to secure investors in the capital-heavy real estate industry. However, Wan Bridge has and continues to deliver top-tier build-to-rent communities successfully. While investors initially receive lower returns, the long-term benefits including a superior product, increased rent, and sustained property value, make their investment decision worthwhile. Our product consistently outperforms competitors, and residents appreciate the quality, design, and affordability they get with a Wan Bridge home. Achieving this success involves overcoming challenges developers, builders, and property managers often face, as our vertically integrated model ensures we’re working together and not in silos.
How does Wan Bridge utilize technology to streamline processes and address challenges in the market?
Six years ago, we recognized the need for an integrated business platform to streamline processes and eliminate inefficiencies. In the face of challenges in 2023, our vertically integrated platform allowed us to navigate the market effectively, responding to interest rate spikes and cost increases. We closely monitored the market, engaged subcontractors, and adapted to changes, which all contributed to our success. Our platform enables weekly cost updates using artificial intelligence that has proven itself crucial for monitoring cost control and determining rental rates, supporting our past and future success.
What are the lessons learned from your experience in navigating market challenges at Wan Bridge?
Navigating market challenges and fluctuations was extremely hard at first, involving lots of work and planning. When costs increased, we were the first to recognize the situation and informed our investors, addressing concerns about the proposed cost increase and prioritizing transparency. We shared updates from subcontractors and the market, taking full responsibility for any operational or marketing errors. Investors acknowledged our foresight when others faced similar challenges later. The key takeaway has been to stay close to the market, be transparent about any changes, and alert investors and partners early.
The second takeaway is more general. When everyone wants to do the same thing, take a moment to pause and reflect. We faced extreme pressure but decided to pause construction due to high costs. During this time, we explored ways to create value and upgraded our product. This pause helped us avoid the peak in prices, saving $3 to $4 million on the project. We benefited from the market cooling down, influenced by the fast increase in interest rates. High interest rates had a minor impact on construction costs compared to lumber costs. With 140 cost items and numerous subcontractors, our complex projects require a platform for weekly updates. Without our artificial intelligence platform, navigating this perfect storm would have been challenging.
How do you attract and retain talent while fostering a collaborative culture within Wan Bridge?
Working closely with our fantastic team is crucial. I am hands-on, interviewing and gathering feedback from employees. This not only ensures their voices are heard but also provides valuable information and suggestions. Our culture values collaboration, combining the wisdom of our 125 employees into Wan Bridge. This approach leverages the experience and expertise of each and every employee, strengthening our company. We also have an internal talent retention program called “Home Grown” that fosters the professional development of all employees, which has been successful since launched in late 2022.
How are you addressing the lack of awareness among homebuyers about build-to-rent options?
Increasing awareness about build-to-rent and Wan Bridge communities is our mission because today, many homebuyers still don’t know about it as an option. BTR communities are also not everywhere and aren’t as recognizable as apartments or master planned communities. It’s not like making a call and having a home available tomorrow, and it’s still a new concept. We can’t do it alone though and want the real estate industry to also endorse this concept. Just like Elon Musk shares his technology, we share the same view. We even do general contracting work for other developers. We want to ensure the industry has the best product for residents. Raising awareness is crucial. Instead of having all those for-sale builders in your neighborhoods, built-to-rent can be a significant sector. They too can provide better property taxes for cities, which is crucial for budgets and revenues, for supporting growth and operations. Build-to-rent can be a good option because it provides attainable housing. Cities need options for police officers, schoolteachers, and staff with lower household incomes, and we offer better single-family homes. This is important for decision-makers to acknowledge.
Why is now a good time for investors to enter the build-to-rent sector?
Investors interested in our sector need to be aware that now is the perfect opportunity to invest. The United States is still short by about 6.8 to 7 million homes due to population growth and demographics. Millennials getting married and starting families are driving strong demand. Despite high mortgage rates, home prices remain steady. The exit cap rate should be around 5 to 5.5%. Now is the perfect time to invest in build-to-rent communities. There may be differing views on potential risks, but everything involves risks. Timing matters, and investing now, when only a few others are, could lead to success. In a year or two, demand will likely increase, and there will be a shortage of stabilized assets. Today’s investors have the right time to exit, provided they make informed decisions. As long as there is demand in the near future, it’s the right place and time to allocate capital.
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